OSCAR THE TUTOR
+27737560989
for FAC MAC ECS DSC TAX QMI FIN INV BNU STA tutorials
1.1 Mbali Creations (Pty) Ltd uses a normal costing basis to measure input costs. Briefly explain why this method is the most
suitable for the company. (2)
Normal costing is suitable because it allows Mbali Creations (Pty) Ltd to apply overhead costs to products using a predetermined
rate. This provides a consistent and stable product cost, which is useful for pricing and decision-making, even if actual overhead
costs fluctuate.
, 1.2 Would the glue used to affix the brand logo be classified as indirect materials or consumables? Motivate your answer.(2)
The glue would be classified as indirect materials.
Indirect materials are materials that are used in the production process but are not a significant component of the final product.
They are often difficult or costly to trace directly to individual units of output.
In this case, the glue is necessary to attach the brand logo, but it's not a main material like leather or fabric, and the cost of glue
per handbag is likely insignificant and hard to track.
1.3 Calculate the quantity and cost of purchases of leather and fabric lining for the financial year ended 31 March 2025.(6)
Leather:
Leather used(2,900 handbags * 1.5 m2/handbag) 4,350
Closing inventory: 530
Opening inventory: -485
Leather purchased 4,395
Cost of leather purchased(4,395 * R120) R527,400
Fabric Lining: OSCAR THE TUTOR
Fabric used: (2,900 handbags * 150 +27737560989
for FAC MAC ECS DSC TAX QMI
cm/handbag /100) 4,350 meters
FIN INV BNU STA tutorials
Fabric used in rolls: (4,350 meters / 10
meters/roll) 435 rolls
Closing inventory: 80 rolls
+27737560989
for FAC MAC ECS DSC TAX QMI FIN INV BNU STA tutorials
1.1 Mbali Creations (Pty) Ltd uses a normal costing basis to measure input costs. Briefly explain why this method is the most
suitable for the company. (2)
Normal costing is suitable because it allows Mbali Creations (Pty) Ltd to apply overhead costs to products using a predetermined
rate. This provides a consistent and stable product cost, which is useful for pricing and decision-making, even if actual overhead
costs fluctuate.
, 1.2 Would the glue used to affix the brand logo be classified as indirect materials or consumables? Motivate your answer.(2)
The glue would be classified as indirect materials.
Indirect materials are materials that are used in the production process but are not a significant component of the final product.
They are often difficult or costly to trace directly to individual units of output.
In this case, the glue is necessary to attach the brand logo, but it's not a main material like leather or fabric, and the cost of glue
per handbag is likely insignificant and hard to track.
1.3 Calculate the quantity and cost of purchases of leather and fabric lining for the financial year ended 31 March 2025.(6)
Leather:
Leather used(2,900 handbags * 1.5 m2/handbag) 4,350
Closing inventory: 530
Opening inventory: -485
Leather purchased 4,395
Cost of leather purchased(4,395 * R120) R527,400
Fabric Lining: OSCAR THE TUTOR
Fabric used: (2,900 handbags * 150 +27737560989
for FAC MAC ECS DSC TAX QMI
cm/handbag /100) 4,350 meters
FIN INV BNU STA tutorials
Fabric used in rolls: (4,350 meters / 10
meters/roll) 435 rolls
Closing inventory: 80 rolls
